Brand name an important strength in world grain

August 01, 2010
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by Morton Sosland

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When it comes to global trade in grain and even dealings in grain-based foods, the importance of branding is too often unappreciated and even neglected. Putting attention solely on price and in periods of scarcity on just being able to offer supplies may secure business but it does not build relationships and may cause less attention to essential integrity. This could be costly in a world where competition for global business has grown increasingly fierce. Indeed, it is in just this sort of environment that the ability of companies to establish their names as respected brands may have value far greater than is frequently perceived. Establishing what a company’s name stands for, in the way of reliability, of service fulfillment, of quality of product, is of huge importance as sources and markets shift with the speed witnessed in the world of grain.

The great value of global branding has been impressively defined in the annual studies published by the Financial Times that identify the leading global brands. Using data compiled by the BrandZ unit of Millward Brown Optimor, the telling part of the latest report for an industry like grain has to do with the global oil industry. At one time, the value of corporate oil brands reflected only their retail business. But this radically changed this year as it was realized how that approach seriously undervalues oil brands. The major part of oil company business and brand value occurs in their exploration (like origination in grain), trading and wholesale operations. This prompted the Financial Times to say, "The brand element is at least as important, if not more, in the business-to-business environment than it is on the retail side."

In an explanation especially relevant to grain, the study’s evaluation of brand value cites how governments react to brands. "A government," it says, "will carefully weigh an oil company’s reputation for having the latest technology and promoting sustainability when granting drilling rights." In a similar point that harkens to how business is done in grain, the study declares that the correlation between oil company size and brand value is not a straight line. This is especially the case when it is recognized how brands influence investors as well as regulators and governments. Also noted is the way brands represent a company’s environmental responsibility.

In addition to underscoring the value of brands in business-to-business transactions, which is the channel through which most grain business is done, this year’s study of brand value reveals two significant shifts. One is the way technology has become a factor that surpasses marketing skills in creating brand value. Thus, Google, with a brand value of $114 billion, is the most valuable name on the list. Seven of the 10 most valuable brands reflect the power of technology. The only food-related business in the top 10 is McDonald’s. Rivaling technology as an influence on brand value is the shift to brands originating in emerging markets. The study lists 13 of the top 100 brands as coming from emerging markets. Seven of those 13 are from China.

Huge shifts also are noted from year to year in brand value, regardless of where a company is headquartered or from where it originates. Thus, a few technology companies suffered sharp falls in brand value as their products were outshone by rivals. BP, the oil industry brand leader at the year’s start, has undoubtedly seen its value drop.

Of great importance for global brand leaders is how they are recovering more quickly from global recession than the overall economy. While grain companies experienced much less impact from the economic downturn than most companies in other industries, the performance of grain leaders with respected brand names in building business in the current economy ought to be a reminder of the great value of a good corporate name. There is hardly a more effective strength for building business.